Bull Of The Day: National Fuel Gas Company

Investors looking for a very promising buy-the-dip candidate after recent market volatility may want to consider National Fuel Gas Company (NFG)  which is one of the latest utility stocks to garnish a spot on the Zacks Rank #1 (Strong Buy) list and lands the Bull of the Day.

Recently added to the strong buy list on Monday, National Fuel joins 8 other Zacks Utilities sector stocks on the list at the moment. To that point, The Zacks Utilities sector is currently ranked second out of 16 Zacks Sectors with National Fuel’s Zacks Utility- Gas Distribution Industry in the top 29% of over 250 Zacks industries.

 

Strong Buy Overview  

As an integrated gas company, National Fuel has natural gas assets in the Appalachian Basin and oil-producing assets in California with the company’s operations consisting of exploration and production, pipeline and storage, along with gathering, and utility and energy marketing.

National Fuel stock is down -17% year to date to slightly trail the Utility-Gas Distribution Industry’s -12% but makes a very strong case for being undervalued considering its somewhat essential services and the strengthening prospects of the broader utility sector.

Plus, NFG shares are still up +24% over the last three years which is roughly on par with the S&P 500’s +27% while largely outperforming its Zacks Subindustry’s +3%. It’s also noteworthy that when including dividends, National Fuel’s +37% total return during this period has topped the benchmark.

Zacks Investment Research

Image Source: Zacks Investment Research

Making National Fuel’s YTD drop more enticing is that annual EPS estimates are still higher over the last two months and NFG shares trade at just 8.5X forward earnings which is a nice discount to the industry average of 13.6X and the S&P 500’s 19.7X.

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Respectable Growth & Stellar Dividend

National Fuel’s annual earnings are forecasted to dip -10% in fiscal 2023 but rebound and rise 11% in FY24 at $5.88 per share. Fiscal 2023 earnings estimates are still up 1% in the last 60 days with FY24 estimates up 5%. Furthermore, FY24 EPS projections would be a 101% increase over the last five years with earnings at $2.92 a share in 2020.

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Image Source: Zacks Investment Research

On the top line, sales are expected to rise 7% this year and jump another 8% in FY24 to $2.55 billion. Fiscal 2024 sales projections would represent 65% growth over the last five years with 2020 sales at $1.54 billion.

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Image Source: Zacks Investment Research

Accompanying National Fuel’s steady growth and more intriguing to investors is its 3.92% dividend yield which trumps its stellar industry average of 3.69% and towers over the S&P 500’s 1.50%.

Zacks Investment Research

Image Source: Zacks Investment Research

 

Bottom Line

Among stocks that look poised for a rebound, National Fuel’s is one of the most intriguing. Now looks like a great time to buy with NFG shares making a strong case for being undervalued and investors are supported by its robust dividend which has led to an impressive total return over the last few years.


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